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Coffee and Croissants

The sharp smell of coffee in the morning is a must for most of us to get ourselves started; throw in a pastry—croissant—and we have enough to seize the day. I know this is a common ritual because I witness these transactions in hundreds of bank statements every year. But these transactions only bring us down. Any specialist will tell you that this diet leaves you with a pile of sugar and a desire for more.

I am no nutritionist and I am not here to talk about your morning eating habits but rather to talk about the habits of your daily spending and how that matches up with the important parts of your overall financial position. In the past, I have written about morning spending behaviors, eating out every day for lunch, and how the average couple spends over $480 per month on that morning coffee / croissant combo, followed by ordered lunches. Our approach to the way we spend money has a long-term effect on our overall financial health. There are many everyday expenses we never think twice about.

When it comes to purchasing a home with a mortgage loan or seeking out how to refinance our current property; we immediately search for the lowest interest rate or the lowest cost loan we can find. Don’t get me wrong, this is a good move and we should all search for this type of loan, especially with such a big financial transaction.

However, many of us wouldn’t be caught dead in a cheap no name coffee shop, yet on our biggest financial transaction most tend to seek out that discount brokerage house. It’s amazing that anyone would not skimp on a good cup of coffee yet not think twice about skimping on the biggest financial transaction in your life time.

Many of these discount brokers know this and will target you emotional and have you focused on a discounted rate rather than total loan service. This is their typical sales tactic to manipulate you into thinking that you have received the optimal loan for your financial position.

Many brokerages will push their low-cut interest rates and high-pressure sales tactics to work, in order for you to sign. I’ve seen a mortgage broker who promises everyone upfront a friendship. However, I know for certain that once the closing is complete and his tail lights are out of view, so is that “friendship.”

These types of brokers know you’re committed to buying the new home, they know when your loan commitment is due in your real estate contract, they also know at what point you do not have time to shop for a better loan provider and they will take advantage of it. As matter of fact, most of these brokers do not even know which lender they are going to send your loan to until they are several days in to the process. Your guess is as good as theirs, if your loan will end up being serviced from another country.

Dealing with a mortgage loan that you think has the best rate or no cost could actually cost you thousands of dollars down the road because you got placed with a bad service provider. A bad service provider could have you spending hours every month trying to straighten out your payments, escrows, and even misplacing a payment causing your credit score to drop.

I can tell you, as a former mortgage broker who got fed-up with seeing so many competitors’ schemes, I had to move from that arena to a position where I can now provide a better service and an overall better-quality loan experience for my clients.

The process starts with us educating you with a full understanding of the loan process. We will also be connecting with you to understand your expectations. We will meet these established expectations throughout the process from application to closing. Part of our process is to talk to you about our service providers and allowing you to have the option to choose one of them prior to submitting your loan to underwriting. We feel this process is important for you to know ahead of time who we are and who you may be working with after the closing.

With such a large financial transaction, it is important to know what you are applying with, the interest rate your applying for, who will be processing and underwriting your mortgage loan, and who you will have to work with for the life of your loan.

Get all your facts. Ask questions. Call us. We will give you all the information you need. We will work to make sure that not only will you be happy at the closing table with us, but that you will be able to have our guidance through the whole process, even after the closing.

30FRM

30 FRM stands for 30 year fixed rate mortgage.

The reason this was chosen was because at the time of writing interest rates are close to all time lows. The only logical direction they can head is up. As interest rates rise, borrowers will need to pay more each month.

With this in mind and although there will always be exceptions, I currently feel that a 30 year mortgage, where the borrower repays both interest and principle at a fixed rate, is probably going to be the most popular as well as the most sensible choice for many families.

Martin Remillard is a licensed loan originator NMLS# 343653

Disclaimer

This blog is only a view point or opinion of the writer(s) and not an endorsement and has not been endorsed by any lender or employer past or present of the writer(s). This is not to be used for anything formal or any legal or binding contractual situation, buyer / borrowers should always seek professional legal advice / counsel. This blog is not directed or intended to be toward any company or individual and if all or any similarity is purely coincidental. However, politicians are subject to satire.